Excellent pay. Private equity professionals had average earnings (base pay plus bonus) of $315,000 in 2017, according to the 2018 Private Equity and Venture Capital Compensation Report. Those without MBAs received $264,464. But keep in mind that most new hires don’t make that much money. You’ll start in the $100,000 to $120,000 range—which is no small potatoes.
Strong employment outlook. Job opportunities for financial analysts who work for securities, commodities, and other financial investment and related firms are expected to grow by more than 15 percent from 2016 to 2026, according to the U.S. Department of Labor, or much faster than the average for all careers.Opportunities for experience. If you work at a “generalist fund,”
you’ll get the chance to learn about a wide variety of industries—from pharmaceuticals and information technology, to oil exploration, consumer goods, and air transportation. You can continue to be a generalist throughout your career or develop specialized knowledge of a particular industry that will increase your marketability with specialty PE firms or hedge funds and investment banks.
Opportunities to transform a company. If you work in a high-level position, you’ll get the chance to use your expertise to improve a company and make it a more attractive candidate for an IPO or a sale.
Stimulating work environment. You’ll be close to the action as your firm makes deals and buys and sells companies. Your colleagues will be well educated and creative, and each PE project provides a different set of challenges that you must overcome.
Tough to break into the industry. It’s hard to land an entry-level job unless you attended a top-tier college or have related experience in the hedge fund or investment banking industries. Many top firms require applicants to have an MBA (or be pursuing an MBA).
Occasionally repetitive job duties. Private equity firms are often small, so you may find yourself taking on the same responsibilities over and over again. Yes, they’re responsibilities worth millions, but they can also be monotonous.
Limited opportunities for advancement at small firms. The guys sitting at the very top of the firm aren’t going anywhere—their names are figuratively, if not literally, on the door of the company. So your chances of advancing at your firm may be low—but you can always start your own firm or move into a career in the investment banking or hedge fund industries.
Sometimes-stressful work environment. The breakneck pace and crisis management required of many private equity employees may wear thin. Even the most jaded Wall Street operator will cop to wanting to spend more time with his or her family after a while.
Not much diversity. Women held only 9.4 percent of senior-level positions at private equity firms in 2017, according to Preqin (an alternative investment research firm)—a percentage that’s significantly lower than their representation in the overall U.S. population. Ethnic minorities are also vastly underrepresented in the PE industry.
Negative view of the industry by the public. Get ready to take some heat from your friends and family. Critics of private equity firms believe that PE firms are bad for companies and employees in the long run—causing massive job losses. The American Investment Council counters that “the private equity industry benefits investors, companies, workers, and communities. Investors gain from higher returns and less volatility than public markets. Companies receiving private equity investment benefit from access to capital as well as business mentorship and expertise. Workers benefit from stronger companies that are committed to growth. And communities across the country are bolstered by private equity investment that helps build sustainable companies and jobs.”